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The BOJ Policy Board began a two-day meeting Wednesday amid new signs the nation’s long-suffering economy is bottoming out.

Despite decreasing downward pressure on some parts of the economy, the nine-member policy panel is expected to leave its ultra-easy monetary policy intact, as the central bank believes overall conditions remain severe.

The meeting is the first to be attended by two newly seated members — Toshikatsu Fukuma, former adviser at Mitsui & Co., and Hidehiko Haru, former executive vice president of Tokyo Electric Power Co.

During its previous meeting, on March 19 and 20, the panel voted to maintain its ultra-easy monetary policy, including 1 trillion yen in outright monthly purchases of long-term government bonds.

It also decided to keep its policy of flexibly providing funds, which is in addition to its target balance of 10 trillion yen to 15 trillion yen for accounts held at the Bank of Japan by each commercial bank.

The balance rose to a record-high 27.61 trillion yen on March 29 to cope with increasing demands for funds ahead of the March 31 end of fiscal 2001.

The new economic signposts include the “tankan” survey, released April 1, which shows that business sentiment among major Japanese manufacturers stopped deteriorating in the first quarter of 2002 after declining in the previous four quarters.

BOJ Gov. Masaru Hayami said at a meeting of the BOJ’s regional branch managers on April 4 that the economy is still deteriorating. He said, however, that downward pressure is weakening due to progress in inventory adjustment and a brightening export environment.

Most regional branches echoed Hayami and reported that downward pressure on their economies is easing, although they continue to face problems, including high unemployment.

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